The coronavirus shutdown has forced a reset to consumers’ purchasing behavior across the globe and at every income level. In a blink of the eye, consumer spending shifted from discretionary to necessity purchases and has remained that way throughout the months of the shutdowns.
With luxury being the most discretionary of all consumer purchases, it was the first consumer segment to suffer cutbacks due to the coronavirus and is shaping up to be the last one that will recover.
While luxury brands have been able to limp along throughout the duration thanks to their online presence, the virtual global shutdown in affluent consumers’ lifestyles has given them idle time to reassess the priorities in their lives. Luxury brands and the conspicuous consumption that sustains them are coming up on the short end of the stick.
The luxury market drives on the psychology of affluent consumers. When they feel good about themselves and on solid ground financially, they give themselves permission to indulge. When they don’t, they won’t. It’s that simple.
Right now, nobody feels confident or assured that they or their loved ones will get through this unscathed and depending on where they fall on the income/wealth spectrum, their financial status may be in question, too. How long these feelings of uncertainty will last is the $64,000 question.
Looking across the luxury consumer market, luxury brands can count on their rich customers to come back, maybe not with the same enthusiasm short term, but return they will.
That will not be the case for the mass-affluent HENRY (high-earners-not-rich-yet) consumers who occupy the space between the middle-income consumers ($50,000-$99,000) and the ultra-affluent elites ($250,000+).
This easy-to-read 35+ page report explores what the new-normal, post-coronavirus world will look like from the perspective of the HENRYs and ways that luxury brands can connect with them.
The luxury market is going to be profoundly changed by profound changes to the HENRYs mindset, priorities, and values.